Issue Date: April 30, 2007
Federal insurance programs criticized
The federal flood insurance and crop insurance programs have done little to understand the financial risks of global climate change, says a Government Accountability Office report released on April 19. Private insurers incorporate climate-change impacts into their annual risk management practices, and some "are assessing its potential long-term industry-wide impacts," the report says. But the two major federal insurance programs—the National Flood Insurance Program and the Federal Crop Insurance Corp.—have not developed comparable assessments, even though the frequency and severity of damaging extreme weather events are expected to increase throughout the century. Between 1980 and 2005, federal flood insurance coverage quadrupled to almost $1 trillion, and federal crop insurance exposure experienced a 26-fold increase to $44 billion, the report says. Claims under both programs increased during this period. The exposure to catastrophic weather events places the federal government at increased financial risk, GAO says. At the Senate Homeland Security Committee hearing at which the report was released, USDA and Department of Homeland Security officials promised to follow GAO's recommendations.
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